The COVID-19 pandemic has sent shockwaves through the economy. Beauhurst, a leading source of information on ambitious British companies tracks 28,499 ambitious companies — and the UK’s 3.8m SMEs in general which they've found to be particularly badly affected.
Their report on the impact of COVID-19 on ambitious UK businesses yesterday revealed that "these smaller companies can’t afford to keep large reserves of cash, meaning they’re especially vulnerable to sudden economic shocks. And with 2.8m employed by ambitious companies—and 16m by SMEs more broadly—this goes well beyond being simply a “business problem”. It’s a problem for society and, for millions of households, a very personal problem too".
However, Beauhurst say that there’s been a lack of clarity over the extent of this problem. Their Data team has worked to determine the precise effects of COVID-19 on the companies tracked on the Beauhurst platform which allows them to measure and map the broad impact of the pandemic on the UK’s high-growth economy, as well as the individual measures that are being taken to limit the spread and consequences of coronavirus.
In their preliminary report, they have highlighted particularly vulnerable areas as well as the very fortunate categories of companies that may perform well under these circumstances.
In producing the report, Beauhurst have assigned all companies up to 16 of the following “COVID-19 impact tags”:
- Temporary cessation of operations
- Closing most or all physical premises
- Limiting physical services provided
- Restrictions currently prevent provision ofproduct/service
- Surge in demand
- Creating job opportunities
- Offering product for free/reduced cost
- Reduced operating hours
- Offering online services only
- Take-away only
- Explicit staffing cuts
- Increased lead times
- Loss of key customer group
- Struggling to cope with demand
- Fundamental business model change
- Permanent closure of the business
Based on these tags, they have built an algorithm that determines a company’s “COVID-19 status” from the following selection:
Potentially positive impact: A company that can potentially grow its operations as a result of these circumstances.
Low impact: A company that will be able to largely continue normal operations, albeit possibly with safety measures such as working from home in place.
Moderate impact: A company that has suffered disruption beyond mere inconvenience but is mostly able to continue operations.
Severe impact: A company that has suffered serious disruption to its ability to operate.
Critical impact: A company that is facing an existential threat to its ability to continue in operation.
Permanent closure: A company that has definitively ceased trading as a result of COVID-19.
Their findings reveal that:
More than half of the UK’s ambitious companies are ‘at risk’
Beauhurst have revealed that 53% of high-growth companies are in an ‘at risk’ category, and 17% are facing a high level of risk, falling into the severe or critical categories. Just under a third lie within the low impact group, whilst 15% of companies may experience a positive outcome, with a new wave of customers and increased demand. So far, just 17 high-growth businesses in the UK have closed their doors due to COVID-19.
28% of companies have limited physical services
Unsurprisingly, they found that "the most common impact to operations across all companies is a limitation on essential physical services. Meanwhile, 12% are completely prevented from providing their products or services. It’s encouraging to see that the second most common impact is a surge in demand for goods and services, with 19% of companies assigned this tag".
Henry Whorwood, Head of Research & Consultancy at Beauhurst says that:
"The companies we track are the UK’s economic powerhouse. They employ millions of people, have received billions in investment and grants, and operate in sectors as diverse as AI and catering. It’s therefore crucial to understand how the Covid-19 epidemic is impacting these businesses. Our data, analysed in the following pages, show just how much is at stake. These firms will be integral to the UK’s productivity as we enter recovery, so it’s crucial to make sure the interventions proposed by the Government reach these companies".
The full report can be accessed here.